Inheritance $ - What would you do?

[JamesMom]

I have already made up my mind as to what I will do, but wanted to know what others might do.

My mom passed away without a will in Feb. I am currently in process of being appointed Administrator. I estimate that my proceeds from the estate will be in the range of $100,000 when we sell her house & her other investments.

I see three choices with the money:

1 - Pay off my Student Loans (Not posting the amount - I was a STUPID in college, but I do have 3 degrees) with very little left over. I have been in defferrent for forever (still in school with degree #4) and the payments are manageable with my husbands salary (~10% of gross), but it would be fantastic to not have this over our heads anymore.

2 - Buy my mom's house. I plan on putting it on the market for $80,000 since it needs about $20,000 of updates. Built in 1986 it still has the original appliances/laminate floors & counters, upstairs bath needs repairs - floor damage. Entire house needs to be repainted. The tax roll says house is worth $110,000 and is 1900 sq feet (3 bed, 2.5 bath) with a huge covered back patio and yard.
But that is when we find a buyer for my mom's house. several houses in her neighborhood have been on the market for over a year and are not overpriced. It costs ~$9,000 a year to maintain her house with taxes/insurance/utilities/pay neighbor to keep an eye on it & maintain lawn.
We currenly live in a town we love, school we love in a house we love. But the prospect of owning a home outright is appealing and it has enough space for our family with an elementary school at the end of the block. The commute would be the same for hubby's work.
Alternately - we could simply spend the money on our house loan and we would still owe about $20,000 - and pay off our mortgage in 2 years!

3 - Put the money in retirement accounts. Dribble out the cash $10,000 a year (spouse & I) into Roth IRAs and seriously beef up our retirement accounts which are woefully small (we are doing better with 10% 401k this year). Continue to make student loan and house payments.

We do have 6 months in an emergency fund and have no credit card or car debt at this time, if that helps any. The kids college funds are about 50% funded and don't really see that as an option right now.

We are doing option number 1, but the others are interesting, no?

 

[apnep]

Hi,
Sorry for the loss of your mom.

I would definitely pay off the loans, then sell her house even if it means going lower than the others on the market just so you don't have to maintain it, and use those funds to pay down your mortgage since you love your neighborhood.

Good luck to you. I'm sure your mom will help you decide.

Ang

 

[mrsklamc]

I think since you love your house you are making the right choice. If it would mean a lot to you to move into your mom's house I could see the argument for that as well. It will be great to get that out from over you.

I would also suggest putting your retirement funding before your kid's college. The experts say 'your kid can get a scholarship for college, there are no scholarships for retiring!'

 

[Mom2Ben02]

Pay off student loans - use the monthly savings to beef up retirement accounts to the max...any extra on the mtg payment

 

[DVCLiz]

I'd sell the house and invest the money, then use the interest to pay off the student loans. At some point the loans will be paid and you still have the principal.

 

[lovesmurfs]

Sorry for your loss.

I agree -- Definitely the student loans.

 

[ceecee]

I'm assuming you don't have $100,000 in student loans, so pay off the loans and use the balance on your home loan.

 

[tink1969]

It sounds to me like you are currently renting a home....yes?
You said owning a home (your mother's) sounds appealing. If you did move in to your mothers home, and assuming you are currently renting, you could then use the 'rent' money towards the student loans.

 

[tink1969]

Sorry...I just re-read your post. You meant you could pay off your current home loan with the money.
In that case, your goal should be to pay off your student loans.

 

[shortbun]

I think you should speak with a financial counselor. There is a lot at stake here. I would sell the house and use the money. Why do you have to 'buy' the house. Do you have siblings? If you are her heir, the house should be yours after taxes are paid. I'm guessing you can MAKE more say on tax free bonds, than the interest rate on the student loans is costing you.

 

[deerhart]

real estate passes immediately to heirs upon death. Its still dealt with in probate, but you outright own it as a tenant in common with any other heirs.

If you have no siblings alive, then there are no other heirs.

 

[JamesMom]

real estate passes immediately to heirs upon death. Its still dealt with in probate, but you outright own it as a tenant in common with any other heirs.

If you have no siblings alive, then there are no other heirs.

Op, here.

Yeah, I have 4 brothers & sisters scattered across the country. They are relinquishing their rights to me as administrator for the investments and yes we all 'own' the house.
I have a larger stake in the proceeds because I took care of (and paid for) my mom's care her last year [she didn't give anyone power of attorney for access to her money either. She thought she was living heathly forever. I will be reimbursed from the estate and insurance claims] and I get 5% as Administrator. The other siblings share in is in the $50K range and nobody else is interested in the house.
Since 5 people own the house, I have toyed with the idea of 'buying' it from my siblings and then I guess I can sell later to reap the proceeds of the inheritence. Then all five of us don't have to be involved in the listing, sale and closing. Either way it's a lot of work. -- thanks mom,

 

[Mary•Poppins]

Join the board "Live Like No One Else" and see what they say. It is a financial board that follows the Dave Ramsey principles.

My guess is that they would say pay off your student loans.

... and I am truly sorry for the loss of your mother.

 

[PrincessBelle09]

I am so sorry for your loss.

I do think paying of the student loans is the right decision. You seem to be in great financial shape except for the student loans and mortgage. I always go with what Dave Ramsey would do. =)

 

[robinb]

I'd sell the house and invest the money, then use the interest to pay off the student loans. At some point the loans will be paid and you still have the principal.

I think this is the best solution. Student Loans do not have really high interest rates so it doesn't make a lot of sense to pay them off early.

 

[buckler]

Since 5 people own the house, I have toyed with the idea of 'buying' it from my siblings and then I guess I can sell later to reap the proceeds of the inheritence. Then all five of us don't have to be involved in the listing, sale and closing. Either way it's a lot of work. -- thanks mom,

This sounds risky. You have no idea how much you can sell the house for in the future. You might overpay your siblings for the house and wind up taking a loss.

 

[diesel]

I don't want to sound like a downer but I wouldn't count your eggs just yet. Money does strange things to families and since your mother didn't have a will there maybe some inside squabbling between you and your siblings. Things may seem all peace and quiet but when money gets involved people get greedy.

Just because you took care of your mother and paid for things while she was alive does not guarantee you a bigger portion in her estate. I would think the estate would have to be split evenly between your siblings no matter who cared for her.

 

[stashbin]

I would pay my house off as soon as I could with the economy the way it is. Let the student loans wait since the bank has all of this bail out money.

 

[DVCLiz]

Before I paid off any student loans I would wait and see what the new health care bill says about them. There are some changes that might affect you and it might not be the best use of your money to pay off those loans entirely.

 

[HeyIt'sMe]

Op, here.

Yeah, I have 4 brothers & sisters scattered across the country. They are relinquishing their rights to me as administrator for the investments and yes we all 'own' the house.
I have a larger stake in the proceeds because I took care of (and paid for) my mom's care her last year [she didn't give anyone power of attorney for access to her money either. She thought she was living heathly forever. I will be reimbursed from the estate and insurance claims] and I get 5% as Administrator. The other siblings share in is in the $50K range and nobody else is interested in the house.
Since 5 people own the house, I have toyed with the idea of 'buying' it from my siblings and then I guess I can sell later to reap the proceeds of the inheritence. Then all five of us don't have to be involved in the listing, sale and closing. Either way it's a lot of work. -- thanks mom,

I'm sorry about your loss.

When my Mom passed away in 1998 she also had no will. I have 3 siblings and they all agreed to have me appointed as the executor/administrator of her estate. I was also her primary caregiver when she was sick and she lived with me for about a month before she passed away.

Her estate consisted of a checking account (I was an authorized signer), an investment account and her house which we sold. My siblings & I wanted to give my youngest sibling more of the money from Mom's estate (since she was much younger than the rest of us and still in college) but the attorney told me that since there was no will we had to split everything evenly among all 4 siblings. Then if we wanted our youngest sibling to get extra we'd each pay that to her which is what we did.

And yes, it IS alot of work.